S&P 500 Valuation Multiples Overvaluation in the S&P 500, especially among tech and AI stocks, is a legitimate concern in light of downward revisions to earnings estimates for 2025 and the high degree of index concentration. Image: Real Investment Advice
Scatter Plot Returns of P/E Multiples and S&P 500 1-Year Returns The lack of correlation between the P/E ratio and the S&P 500’s one-year return suggests that investors should focus on long-term strategies rather than making decisions based solely on current valuations. Image: Carson Investment Research
Valuation – Equal-Weight S&P 500 P/E Multiple According to Goldman Sachs, the equal-weight S&P 500 P/E multiple is currently 13% above fair value. This suggests that stocks in the S&P 500 Equal Weight Index may be relatively more expensive compared to their earnings potential. Image: Goldman Sachs Global Investment Research
S&P 500 Valuation Matrix (12-Month Forward EPS and P/E Multiple) According to Morgan Stanley, U.S. equity market gains in 2024 may stall due to high forward multiples and ambitious earnings forecasts for the next 12 months. Image: Morgan Stanley Wealth Management
FY2 P/E Multiple of S&P 500 Top and Bottom Valuation Quintiles The valuation gap between high and low valuation U.S. stocks remains elevated, presenting potential opportunities for value investors. Image: Goldman Sachs Global Investment Research
U.S. Labor Market – Multiple Jobholders, Primary and Secondary Jobs Full Time More Americans are taking on second jobs as the cost of living increases. Image: The Daily Shot
S&P 500 Index Performance During Periods of Multiples Fed Rate Hikes Historically, Fed rate hikes cycles are not a threat to the S&P 500 Index. Image: LPL Research
S&P 500 Valuation Multiples S&P 500 valuation multiples remain stretched and well above averages. Image: Goldman Sachs Global Investment Research
Valuation – S&P 500 Forward P/E Multiple and First Hike of Fed Tightening Cycle Historically, the S&P 500 forward P/E remains flat in the 6 months before and after the start of the first Fed hike. Image: Goldman Sachs Global Investment Research
FY2 P/E Multiple of S&P 500 Top and Bottom Sector-Neutral Valuation Quintiles The valuation dispersion for stocks in the S&P 500 is historically high. Image: Goldman Sachs Global Investment Research
Valuation – Consensus FY2 P/E Multiple – Information Technology vs. S&P 500 S&P 500 valuations remain high, particularly info tech stocks. Image: Goldman Sachs Global Investment Research